Over half of firms say regulation is barrier to growth

Business leaders have urged the Government to speed up plans to reform
employment law and cut red tape after an official survey showed more than
half of companies cite regulation as a barrier to growth and jobs.

One in nine companies have contacted an industry body to suggest how to improve the regulatory regime, but many fear too little is being done.Photo: ALAMY

Manufacturers' group the EEF said more must be done to tackle red tape and reduce the burden of complex rules, after 55pc of businesses said the level of regulation is an obstacle to growth, according to a survey commissioned by the Department for Business and the National Audit Office.

The number of companies stating that burdensome rules get in the way of growth and jobs is down from a peak of 62pc in 2009 but still at an unacceptable level, the EEF said.

"With its own report showing that more than half of companies still cite regulation as an obstacle to growing their business, the government can and must do better. In particular, it must grasp opportunity with its forthcoming employment law reforms to take measurable actions that will make a real difference to business.”

Other figures in the report showed that 46pc of businesses believe the burden of regulation will stay the same over the next 12 months, as scepticism sets in that the Government will fail to tackle the issue.

One in nine companies have contacted an industry body to suggest how to improve the regulatory regime, BIS said.

However, two fifths of businesses said the balance of regulation is "about right", the survey showed.

The report follows a separate study which warned more job cuts and pay freezes are on their way as employers struggle to hire amid eurozone fears. Industry experts say that cutting red tape would give businesses the confidence to recruit new staff.

Business and Enterprise Minister Mark Prisk said the dip in the number of companies believing red tape was a barrier to growth showed progress was being made.

“Reducing the burden of regulation for business is at the heart of the Coalition Government’s ambition to make the UK one of best places to start and grow a business. This report suggests that businesses can now see progress, but there is clearly more to do. We are committed to this process," he said.

The Government has recently proposed several measures to try to cut red tape, including reforms to the employment tribunal system and the length of time it takes employers to consult staff on mass redundancies.